Description
The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services.
Marketing Mix
2. Pricing
Prices
? ? ?
How do customers see prices? How do companies set prices? How do companies adapt prices?
14-2
Prices
? ?
?
? ?
?
? ?
?
Rent Tuition Fee Fare Rate Toll Premium Salary Commission
14-3
Prices
?
?
?
Of the 4Ps, only prices produce revenue. All others are costs. Prices are easiest to adjust. People who affect prices- company, customer, competitor, environment.
14-4
Prices
AMC, Taxes, Insurance Price
Discount, Freebies, Bonus Points, Free Service
14-5
How do customers see prices?
Marketer’s Stated Price Customer’s Perceived Price
Upper Threshold Lower Threshold
VALUE Performance, Quality Utility, Availability Connotations, Reputation, trust, esteem, Customer support
14-6
Pleasant Surprise Perceived Price > Stated Price
Unpleasant Surprise Perceived Price < Stated Price
How do customers see prices?
?
Reference prices- Observed Price vs. Reference Price (Frame of Reference-Surroundings, MRP, EMIs) Price-quality inferences-Price as an indicator of quality Image Price- for ego sensitive products-Perfumes, designer clothes
?
?
? ? ?
Price endings/cues Mental Price Barriers-Customers see prices “Left to Right”. Sale signs next to price spur demand. 14-7 Prices ending in 0 and 5 are easier for consumer to
How do companies set prices?
Prices may be set by1. Boss 2. Product Manager/PMG 3. Pricing Department
The price setting process1. Select the price objective 2. Determine demand 3. Estimate costs 4. Analyze competitor price mix 5. Select pricing method 6.14-8Select final price
Step 1: Selecting the Pricing Objective
? ?
?
? ?
Survival- overcapacity, intense competition, Maximum current profit Maximum market share- market penetration pricing Maximum market skimming- market skimming pricing Product-quality leadership
14-9
Step 2: Determining Demand
?
Price sensitivity
?
?
Estimating demand curves
Surveys Price Experiments Statistical Analysis
?
?
? ?
Price elasticity of demand Short-run and long-run price elasticity
14-10
Step 3: Estimating Costs
?
Types of Costs
?
Accumulated Production
?
?
Activity-Based Cost Accounting Target Costing
14-11
Step 4: Analyzing Competitor’s Costs, Prices, and Offers
? ?
?
? ?
Fixed costs Variable costs Total costs Average cost Cost at different levels of production
14-12
Step 5: Selecting a Pricing Method
? ?
?
? ?
?
? ? ?
Markup pricing Target-return pricing Perceived-value pricing Value pricing Going-rate pricing Auction-type pricing
English auctions Dutch auctions (reverse auction) Sealed-bid auctions (tenders)
14-13
Step 6: Selecting the Final Price
? ?
?
?
Impact of other marketing activities Company pricing policies Gain-and-risk sharing pricing Impact of price on other parties
14-14
Price-Adaptation Strategies
? ?
?
?
Geographical pricing Discounts/allowances Promotional pricing Differentiated pricing
14-15
Promotional Pricing Tactics
? ?
?
? ?
?
?
Loss-leader pricing Special-event pricing Cash rebates Low-interest financing Longer payment terms Warranties and service contracts Psychological discounting
14-16
Differentiated Pricing and Price Discrimination
? ?
?
? ?
?
?
Customer-segment pricing Product-form pricing Image pricing Channel pricing Location pricing Time pricing Yield pricing
14-17
Increasing Prices
? ?
?
?
Delayed quotation pricing Escalator clauses Unbundling Reduction of discounts
14-18
Brand Leader Responses to Competitive Price Cuts
? ? ? ? ?
Maintain price Maintain price and add value Reduce price Increase price and improve quality Launch a low-price fighter line
14-19
doc_802418740.pptx
The marketing mix is a business tool used in marketing and by marketing professionals. The marketing mix is often crucial when determining a product or brand's offering, and is often synonymous with the four Ps: price, product, promotion, and place; in service marketing, however, the four Ps have been expanded to the Seven Ps or eight Ps to address the different nature of services.
Marketing Mix
2. Pricing
Prices
? ? ?
How do customers see prices? How do companies set prices? How do companies adapt prices?
14-2
Prices
? ?
?
? ?
?
? ?
?
Rent Tuition Fee Fare Rate Toll Premium Salary Commission
14-3
Prices
?
?
?
Of the 4Ps, only prices produce revenue. All others are costs. Prices are easiest to adjust. People who affect prices- company, customer, competitor, environment.
14-4
Prices
AMC, Taxes, Insurance Price
Discount, Freebies, Bonus Points, Free Service
14-5
How do customers see prices?
Marketer’s Stated Price Customer’s Perceived Price
Upper Threshold Lower Threshold
VALUE Performance, Quality Utility, Availability Connotations, Reputation, trust, esteem, Customer support
14-6
Pleasant Surprise Perceived Price > Stated Price
Unpleasant Surprise Perceived Price < Stated Price
How do customers see prices?
?
Reference prices- Observed Price vs. Reference Price (Frame of Reference-Surroundings, MRP, EMIs) Price-quality inferences-Price as an indicator of quality Image Price- for ego sensitive products-Perfumes, designer clothes
?
?
? ? ?
Price endings/cues Mental Price Barriers-Customers see prices “Left to Right”. Sale signs next to price spur demand. 14-7 Prices ending in 0 and 5 are easier for consumer to
How do companies set prices?
Prices may be set by1. Boss 2. Product Manager/PMG 3. Pricing Department
The price setting process1. Select the price objective 2. Determine demand 3. Estimate costs 4. Analyze competitor price mix 5. Select pricing method 6.14-8Select final price
Step 1: Selecting the Pricing Objective
? ?
?
? ?
Survival- overcapacity, intense competition, Maximum current profit Maximum market share- market penetration pricing Maximum market skimming- market skimming pricing Product-quality leadership
14-9
Step 2: Determining Demand
?
Price sensitivity
?
?
Estimating demand curves
Surveys Price Experiments Statistical Analysis
?
?
? ?
Price elasticity of demand Short-run and long-run price elasticity
14-10
Step 3: Estimating Costs
?
Types of Costs
?
Accumulated Production
?
?
Activity-Based Cost Accounting Target Costing
14-11
Step 4: Analyzing Competitor’s Costs, Prices, and Offers
? ?
?
? ?
Fixed costs Variable costs Total costs Average cost Cost at different levels of production
14-12
Step 5: Selecting a Pricing Method
? ?
?
? ?
?
? ? ?
Markup pricing Target-return pricing Perceived-value pricing Value pricing Going-rate pricing Auction-type pricing
English auctions Dutch auctions (reverse auction) Sealed-bid auctions (tenders)
14-13
Step 6: Selecting the Final Price
? ?
?
?
Impact of other marketing activities Company pricing policies Gain-and-risk sharing pricing Impact of price on other parties
14-14
Price-Adaptation Strategies
? ?
?
?
Geographical pricing Discounts/allowances Promotional pricing Differentiated pricing
14-15
Promotional Pricing Tactics
? ?
?
? ?
?
?
Loss-leader pricing Special-event pricing Cash rebates Low-interest financing Longer payment terms Warranties and service contracts Psychological discounting
14-16
Differentiated Pricing and Price Discrimination
? ?
?
? ?
?
?
Customer-segment pricing Product-form pricing Image pricing Channel pricing Location pricing Time pricing Yield pricing
14-17
Increasing Prices
? ?
?
?
Delayed quotation pricing Escalator clauses Unbundling Reduction of discounts
14-18
Brand Leader Responses to Competitive Price Cuts
? ? ? ? ?
Maintain price Maintain price and add value Reduce price Increase price and improve quality Launch a low-price fighter line
14-19
doc_802418740.pptx